MSME Payment: Trade and Industry seeks deferment of applicability of Income Tax Sec 43B(h)

The Devi Ahilya Chamber of Commerce and Industries has made a representation before the Chairman of the Trade Welfare Board for deferring the applicability of Sec 43B(h).

While the above provision has been made with the noble intention of improving the Cash Flow of the MSME sector, it has proved to be a double-edged sword in as much as it has gone against the interests of the trading community as well as some MSMEs.

Sir, there are many business verticals where the credit terms between supplier and purchaser are determined by prevalent market practices (‘bajar ka dhara’). In trades like Textiles, Chemicals Basic raw materials, the credit terms range from 60 to 90 days or even more.

The market impact of the above provision is:

i) Traders who used to get 60 to 90 days of credit from their suppliers have to now pay in 45 days.

ii) Large industrial customers, who were enjoying 60 to 90 days credit from their vendors have stopped purchasing from the MSME sector and are planning to shift to large industries for their raw material requirements.

Disallowance of the entire purchase amount in case of failure to pay the amount before 31 March of the relevant financial year is draconian and may result in the closure of some businesses.

We, therefore, request you to please urgently take this up with the finance minister and Chairman, CBDT to:

i) Withhold its implementation from 01.04.24 and

ii) Have a retook at the provision in consultation with representatives of various stakeholders.

For Official Representation Download PDF Given Below: